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How CCyBs travel – Internal capital markets & domestic borrowing

Author

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  • Imbierowicz, Björn
  • Loeffler, Axel
  • Ongena, Steven
  • Vogel, Ursula

Abstract

We examine how foreign macroprudential tightening transmits through multinational firms' internal capital markets. Using subsidiary exposure to countercyclical capital buffer (CCyB) increases, we find that while bank credit to subsidiaries falls 10 percent, parents fully substitute this via internal debt. Parents refinance this internal support by increasing borrowing from domestic banks and nonbanks, meeting the substitution needs of their subsidiaries. As a result, foreign CCyB tightening increases the exposure and risk borne by the parent's home jurisdiction. These findings reveal an unintended spillover: tightening in one country raises credit exposure and thereby borrower risk borne by lenders elsewhere through proactive internal financial redistributions within multinational corporations.

Suggested Citation

  • Imbierowicz, Björn & Loeffler, Axel & Ongena, Steven & Vogel, Ursula, 2026. "How CCyBs travel – Internal capital markets & domestic borrowing," Discussion Papers 12/2026, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdps:340012
    DOI: 10.71734/DP-2026-12
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    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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